Worldsteel revises demand forecast down
Global steel demand is expected to increase by 4.5pc on the year in 2021 to 1.85bn t, industry association Worldsteel said today.
This is a downgrade from the April forecast, when the organisation foresaw a 5.8pc rise, underpinned by softer Chinese appetite.
Worldsteel expects Chinese demand to decrease by 1pc on the year, which compares to a 3pc growth forecast previously. Demand was strong in the first half of the year, but has decelerated by double digits in July-August, as a result of a sluggish real estate activity and infrastructure investment. A global pick-up in production has slowed Chinese exports too.
These trends will continue over 2022, according to Worldsteel, and demand is expected to remain at the same level as in 2021, although some restocking might support apparent steel use.
But the association expects the rest of the world to perform more strongly this year, with demand now forecast to grow by 11.5pc, up from 9.3pc in the April short-range outlook.
Developed
Developed economies will boost global demand, with growth projected at 12.2pc for 2021, driven by the EU and North America.
Demand in the EU will rise by 12.7pc, although it is held back by bottlenecks in the automotive industry supply chain. The German market is supported by exports, but affected by the slowdown in the automotive segment, while activity in the construction and home appliances sector in Italy is to recover to pre-Covid 19 levels.
The association has revised up its forecast for the US, Mexico and Canada sharply, from a 7.6pc increase in demand expected in April to 13.7pc now. Recovery in the US continues, driven by policy changes and pent-up demand.
Elsewhere, in Japan and South Korea Worldsteel sees demand continuing to recover, boosted by government infrastructure programmes and global trade. Exports are increasing, as are investment and consumption, while automotive and machinery manufacturing is leading the recovery in Japan.
Developing
Developing countries' steel demand has continued to recover in 2021, aided by rising international trade and commodity prices. Demand is forecast to increase by 11pc in 2021 and by 5pc in 2022.
But high Covid-19 infection rates, low vaccination levels and a sluggish recovery in international tourism continue to weigh on developing economies. In 2022 as vaccinations progress, demand is expected to improve but the pandemic will leave a lasting impact, Worldsteel said.
While poised for a strong recovery from strict lockdowns in 2020, India recorded a severe second Covid wave in April-June 2021, which caused demand to falter. Still, the economic impact of the second wave was much less severe than that of the first. Since July, a healthy recovery has resumed in all sectors, but India's demand forecast fell slightly to 16.7pc growth in 2021, down from Worldsteel's April estimate of 19.8pc. Vietnam's demand forecast has also been revised down owing to surging infection rates, and it is now expected to grow by 2.4pc in 2021, down from estimates of 5pc growth earlier in the year.
Elsewhere, the Latin American outlook is mixed after a strong recovery so far this year led by the automotive and construction sectors. In 2022 the region could lose momentum because of structural issues, such as high inflation and political uncertainty. Demand is forecast to rise by 23.2pc in 2021 but slow to a 0.9pc increase in 2022.
Turkish steel demand will show strong growth in 2021, forecast to rise by 17pc, supported by infrastructure and industrial output. Steel demand is expected to surpass pre-currency crisis levels in 2022, rising by 7.2pc to exceed 36mn t.
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Italian service centres turn to secondary HRC
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Milan, 26 September (Argus) — Italian steel service centres (SSCs) are turning to secondary hot-rolled coil (HRC) as they cannot move their higher-priced prime stock, market participants said on the sidelines of Italian association Assofermet's autumn conference in Milan today. SSCs are buying second-choice material as weak demand means sales of prime material are increasingly lossmaking. With EU mills refusing to cut production, although some have adjusted output, there has been an increased amount of second-choice coils offered in the market. This has allowed SSCs to continue selling processed material in a declining market, which one sheet seller said has been falling by around €10/t each week. While there are some restrictions to using second-choice HRC, such as not being able to meet every customer's request, SSCs can use it for some sales, minimising their losses. Some said SSCs have six months worth of inventory, and stocks will get a further boost from incoming imports in October, which will allow buyers to re-evaluate their stock gaps and establish what they need to purchase domestically. EU mill prices, having lost €47/t in Italy and €36.50/t in northwest EU since the start of September, according to Argus assessments, have prevented imports from being of interest to buyers. The Argus cif Italy HRC assessment has in comparison lost only €15/t since the start of the month. Today some market participants were talking about prices being close to the bottom, a sentiment that was previously seen in June and July, but did not materialise owing to an unexpected further slowdown in demand in September. But producers selling large quantities of second-choice coils, at prices that sources said can be as much as €100/t below costs, is not sustainable. The main issue in the flat steel sector remains a lack of demand, which unless there is an EU stimulus package, will continue weighing on prices, market participants said. By Lora Stoyanova Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Tight supply remains Europe Al driver
Tight supply remains Europe Al driver
London, 25 September (Argus) — European aluminium markets have barely stirred following the slow summer months, as demand in the automotive and construction markets continues to disappoint and sales opportunities for traders and distributors remain sparse even after the holiday period definitively ended. But premiums have remained steady throughout September, as tight supply remains the main driver of the European aluminium market, even more so than earlier in the year, when premiums were climbing amid moderate demand. European aluminium premiums rose by two-thirds over the first five months of the year, with the Argus assessment of the P1020 duty-paid spot in-warehouse Rotterdam premium hitting an 18-month high of $320-350/t in May. Demand, although unimpressive compared with stronger years, increased sufficiently to tip the market balance against tight supply. Availability in Europe was severely limited by low production following sizeable cuts over the previous two years, the absence of Russian metal owing to self-sanctioning by consumers and official sanctions by governments in the UK and US, and aggressive Chinese importing from most international regions. Premiums subsequently edged back slightly to $320-340/t and then began an unprecedented run of flatness over the June-August summer period, as demand fell away in Europe but the sustained tight supply environment stopped premiums from falling back. Throughout the slow summer months, there was a sense that premiums were primed to race higher as soon as demand picked up in the autumn, led by automotive markets that were expected to at least show some improvement after slowing from the middle of the year. But that has not happened, and premiums have continued to flatline at $320-430/t in September, as demand has failed to stir in either the automotive or construction sectors. Europe's largest economy Germany has seen particular weakness in its consumer industries, with the construction sector having been in decline throughout this decade, while major carmaker Volkswagen recently told its employees that it is considering closing some factories. In July, Germany's manufacturing output index hit its lowest since June 2020, according to climate and economy ministry BMWK, with total industrial production down by 2.4pc from June this year and 5.3pc lower than in July 2023. "There has been no bounce-back from the end of the summer. Stockists and distributors still have empty inboxes, which is very unusual for this time of year," one analyst said. "The automotive market is bad and the construction market is terrible." But premiums have not budged against such a bleak demand picture, as supply remains very tight even against that stark lack of buying. The factors that reduced availability in Europe over the past few years remain very much in play, while China's appetite for imports has grown even stronger this year. China's primary aluminium imports in the year to August rose by more than 50pc on the year to 2.58mn t, customs data show. That trend is likely to continue, as domestic Chinese aluminium production is bumping up against the country's output cap of 45mn t/yr. Some had expected earlier this year that China could raise the cap but few are of that view now, especially given the damage done this year to the country's steel industry by excess production. Additionally, most provinces have now mandated efficiency targets. The best way to achieve them is to limit energy use, and aluminium smelters are one of the biggest energy users. "The Chinese production cap is key, and China is within a few hundred thousand tonnes of it already," a second analyst said. "They don't even need to see better demand to keep increasing imports." Tightness in the alumina market will feed through to the smelting industry, limiting output further. UK-Australian mining firm Rio Tinto's alumina output fell by 10pc on the quarter and the year to 1.68mn t in the second quarter, following an incident at its third party-operated Queensland gas pipeline in March, while record Chinese aluminium production this year has also drained alumina supplies. There is little in the way of imports flowing to Europe from other regions. Freight costs remain high, and suppliers in the Middle East and India are showing little inclination to bear the cost of deliveries to Europe without greater price and premium incentives. Consequently, the European market will remain very tight in the fourth quarter, leaving it susceptible to any stirring of demand that could cause premiums to jump. But there seems little chance of any such demand growth until 2025, with few suppliers even reporting discussions for further activity this year. By Jethro Wookey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
EU steelmakers lobby for US Section 232-style tariff
EU steelmakers lobby for US Section 232-style tariff
London, 25 September (Argus) — EU steelmakers are lobbying for emergency restrictions on imports in light of continuing market penetration, according to numerous sources. European steel association Eurofer has met with the European Commission to discuss high imports, at a time when weak demand is already putting pressure on local steel prices. Multiple sources suggest it is lobbying for a tariff similar to the US' Section 232, which applies a blanket tax on all finished steel imports. "The commission of course is aware of the concerns of the sector, it's a sector with which we have a strong ongoing contact and dialogue. Any new trade defence cases are looked at on a case by case basis on their own merits," a commission spokesperson told Argus in Brussels on Tuesday. The commission understands the concerns of mills, but at the same time has to balance the interest of steel users, sources suggest. Imports to the EU's hot-rolled coil (HRC) market have increased dramatically since China started ramping up exports in the third quarter of last year. Imports since July 2023 have constituted around 25pc of all EU market supply when safeguard quotas reset at the start of each quarter, up from 11-15pc in the previous months. Imports rose to a record 1.56mn t in July, and would have been even higher if not for 175,000t being pulled back from clearance to avoid additional tariff rate quota duties. The EU imported 6.2mn t of HRC in January-July, the highest on record, despite tightened safeguards. The share of imports in overall supply is higher on cold-rolled coil and hot-dip galvanised (HDG), where the impact of comparatively higher energy costs is even more problematic for local mills. Steelmaking sources suggest that the existing safeguard is not fit for purpose as a result, and they also question the ability of importers to hold back supply to avoid duties. But others suggest the impact of the existing 15pc other countries cap and continuing dumping investigation has not been felt yet, and that these measures will help tighten the market when demand strengthens. Vietnam is a major source of HDG supply to the EU and sources expect this could be the next dumping case, especially given the country's high usage of Chinese HRC. By Colin Richardson and Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
India's HRC importers hit by falling steel prices
India's HRC importers hit by falling steel prices
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